The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the income of the assessee with respect to contributions received from recognized stock exchanges and the members thereof is eligible for exemption under Section 10 (23EC) of the Income Tax Act.
The bench of Rahul Chaudhary (Judicial Member) and Prashant Maharishi (Accountant Member) has noted that the assessee has received an income of Rs. 92,458,750 by way of statutory contributions received from National Commodity Derivatives Exchange Ltd. and its members. Therefore, in view of the provisions of sections 10 (23EC), 11 (7), and 12 and the notification dated January 18, 2017, issued by the central government the assessee is entitled to claim the exemption.
The respondent/assessee trust has been established by the National Commodity & Derivatives Exchange Limited (NCDEX). The trust was established in terms of guidelines issued by the Forward Markets Commission (FMC) with the object of compensating eligible investor claims against defaulting members. It has the objective of creating awareness and educating the public about the benefits of trading on commodity exchanges and publishing books, etc.
As per the notification dated January 18, 2017, the assessee has been specified as an assessee trust for claiming exemption under Section 10 (23EC) of the Income Tax Act. The assessee is registered under Section 12A.
In the return of income, the assessee claimed exemption under Section 10 (23EC) on account of the contribution received of Rs. 92,458,751. The assessee also has other income other than the contribution income to which provisions of Section 10 (23EC) apply, amounting to Rs. 44,934,879. The assessee claimed deduction of the amount of expenditure incurred on the object of the trust, income under Section 11(1)(a), and accumulation under Section 11(2).
The Centralised Processing Centre of Income Tax did not grant exemption under Section 10 (23EC).
The assessee filed the appeal before the CIT (A). The CIT (A) found that the assessee has received an income by way of a statutory contribution received from National Commodity Derivatives Exchange Ltd. and its members. The CIT(A) directed the assessing officer to delete the addition of Rs. 92,458,750 and grant exemption under Section 10 (23EC) of the Income Tax Act.
The department vehemently supported the orders of the central processing centre.
The ITAT upheld the decision of CIT (A) and allowed the exemption under Section 10 (23EC) to the assessee trust.
Case Title: Income Tax Officer Versus NCDEX Investor (Client) Protection Fund Trust
Source from: https://www.livelaw.in/tax-cases/income-contribution-recognized-stock-exchange-exemption-itat-238965
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